M/s. Nirvi Developers, Ahmedabad V. The Income Tax Officer, Ward-9(1), Ahmedabad

ITA 34/AHD/2015

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 7129 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 year(s) 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-12-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 04-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R R MAKWANA
• Assessee Lawyers: BIREN SHAH
• Keywords: Depreciation; TDS
• Section: 40(a)(ia); 80IB

Judgement Text

ITA No.34/Ahd/2015 A.Y. 2008-09 Page 1 of 3 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “SMC” BENCH, AHMEDABAD BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND Ms. SUCHITRA RAGHUNATH KAMBLE, JUDICIAL MEMBER (Conducted through Virtual Court) ITA No.34/Ahd/2015 Assessment Year: 2008-09 M/s. Nirvi Developers, vs. Income Tax Officer, 1 st Floor, President House, Ward - 9(1), Ahmedabad. Opp. C.N. Vidhyalaya, Ambawadi, Ahmedabad - 380 015. [PAN – AAGFN 3145 F] (Appellant) (Respondent) Appellant by : Shri Biren Shah, A.R. Respondent by : Shri R R Makwana, Sr. D.R. Date of hearing : 30.11.2021 Date of pronouncement : 02.12.2021 O R D E R PER SUCHITRA RAGHUNATH KAMBLE, JUDICIAL MEMBER : This appeal is filed by the assessee against the order dated 10 th October, 2014 passed by the CIT(A)-XVI, Ahmedabad for the Assessment Year 2008-09. 2. The grounds of appeal raised by the assessee are as under : “(1) In law and in the facts and circumstances of the appellant’s case, the learned CIT(A) has grossly erred in upholding the Assessing Officer’s view that disallowance u/s 40(a)(ia) is not income derived from the business of development of housing project and confirming disallowance of deduction u/s 80IB on disallowance of expenditure u/s 40(a)(ia) made in the return of income when no such addition is called for. The deduction u/s 80IB(10) at Rs.7,10,406/- shall be duly allowed. (2) On the facts and in the circumstances of the case, the Learned CIT(A) has erred in upholding disallowance of Rs.1,09,895/- when no such disallowance is called for. It may be deleted. ITA No.34/Ahd/2015 A.Y. 2008-09 Page 2 of 3 (3) On the facts and in the circumstances of the case, as no disallowance of expenditure under Section 40(a)(ia) and depreciation is required to be made as no income has accrued to appellant and no expenditure is claimed against such income, because expenditure is transferred to Work In Progress and income of appellant ought to have been assessed at Rs. Nil. (4) The appellant craves leave to add, alter, amend, and/or withdraw any of the grounds or ground either before or at the time of appeal haring.” 3. The assessee filed return of income for the A.Y. 2008-09 declaring total income at Rs. Nil after claiming deduction under Chapter-VIA of the Income Tax Act, 1961 of Rs.7,10,406/-. The Assessing Officer passed Assessment Order dated 30.11.2010 thereby making addition of Rs.8,20,301/- and disallowed claim of deduction under Section 80IB. 4. Being aggrieved by the Assessment Order, the assessee filed appal before the CIT(A). The IT(A) dismissed the appeal of the assessee. 5. The Ld. AR submitted that the issue related to disallowance under Section 40(a)(ia) of the Act by the Assessing Officer is not correct as the assessee is in the business of development of housing project and has claimed deduction under Section 80IB of the Act. As regards the disallowance of depreciation, the Ld. AR submitted that such disallowance is not as per the law. The Ld. AR submitted that the issue is covered by the decision of the Hon’ble Gujarat High Court in the case of ITO vs. Keval Construction (2013) 33 Taxmann.com 277. 6. The Ld. DR relied upon the Assessment Order and the order of the CIT(A). 7. We have heard both the parties and perused all the relevant materials available on record. It is pertinent to note that the assessee has suo motu disallowed Rs.7,10,406/- under Section 40(a)(ia) of the Act on account of non-payment of TDS but claimed deduction under section 80IB(10) on such disallowance. In the current Assessment Order the project is shown as under completion i.e. work-in-progress which is also accepted by the Assessing Officer. No expenditure/loss of any sort was claimed by the assessee. The computation of income in subsequent year was done in ITA No.34/Ahd/2015 A.Y. 2008-09 Page 3 of 3 percentage completion of project method as per the submissions of the assessee before the revenue authorities. Thus, the disallowance in respect of expenditure under Section 40(a)(ia) of the Act does not come in the purview and the Assessing Officer as well as the CIT(A) has overlooked this fact which was undisputed by the Assessing Officer at the time of assessment proceedings. The decision of the Hon’ble Gujarat High Court in the case of Keval Construction (supra) has categorically mentioned that even if certain expenditure which was incurred by the assessee for the purposes of development of housing project was not allowable by virtue of Section 40(a)(ia) of the Act and when the assessee did not deduct the tax at source as required under law, it cannot be denied that such disallowance would ultimately go to increase assessee’s profit from business of developing Housing Project. Whatever be ultimate profit of the assessee as computed even after making disallowance under section 40(a)(ia) of the Act would qualify for the deduction as provided under the law. Thus, the Hon’ble High Court has given a finding that those assessees are entitled for claiming deduction under section 80IB(10) of the Act. The CIT(A) has totally ignored the case law mentioned by the assessee and decided against the assessee which is not just and proper. Hence, the appeal of the assessee is allowed. 8. In the result, appeal of the assessee is allowed. Pronounced in the open Court on this 2 nd day of December, 2021. Sd/- Sd/- (WASEEM AHMED) (SUCHITRA RAGHUNATH KAMBLE) Accountant Member Judicial Member Ahmedabad, the 2 nd day of December, 2021 PBN/* Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad